Happy days are here again

Happy days are here again

A recent review of property-and-casualty operating results confirms the continued spectacular underwriting profits for insurers. Shippers can now begin their shopping expeditions to secure competitive insurance quotations as their insurance programs expire. Most, if not all, major classes of coverage are being offered to insurance buyers at reduced premiums. These decreases average 10 to 12 percent and can be even higher for shippers and motor carriers with excellent claims experience. I'm not predicting a freefall in insurance pricing. I am suggesting that buyers be alert to the rapidly changing marketplace so they obtain premium reductions that are readily available.

A number of readers have asked recently what approaches buyers of transportation insurance can take in seeking competitive insurance proposals. Here are some tips:

-- Choosing a broker: Better an expert in the field than on the green.

The insurance broker that represents you must be dependable, competent and, above all, experienced in your industry. This is critically important to the shipper who does not have a professional in-house risk management staff. In choosing a broker, forget about brothers-in-law and fellow golf-club members. If the broker can't differentiate between an air waybill and a storage receipt, his efforts are likely to produce disaster.

Select a broker who knows your business well. Insurance mega-brokers have an enormous talent pool of experienced professionals. But remember, bigger isn't always better, particularly if the specialized talent you require is located across the country.

Don't overlook regional insurance brokers as an alternative marketing source. Their growth has been outstanding and many have acquired experienced personnel who add much to their capabilities.

By far, the specialized insurance broker who is a leader in your particular industry segment is the ideal choice. He will have the clout each buyer needs.

-- The more the merrier: Consider using multiple brokers.

You have several alternatives in the broker-selection process. If you pick several brokers to represent you in the marketplace, be absolutely certain that you designate the markets you will permit them to approach.

Demand that each competing broker provide you with a list of the markets from which he wishes to obtain proposals. Grant each broker exclusive authority with those markets.

Be absolutely certain that each broker lists his choices preferentially. Ask to see his proposals to insurers. Confirm that each has identical underwriting data that is being submitted to each insurer.

Monitor each broker's activities at least weekly. Demand interim reports of marketing activity. Submit historical claims data, currently valued for a least the prior three-year period.

Begin the renewal process at least 90 days in advance of current policy expirations. Insurers need time to evaluate and price your risk.

-- When one's enough: Getting the most from a specialist.

Alternatively, do not overlook the possible brokerage selections based upon the individual brokerage firm's conceptual report of how it will market your account.

If you are comfortable with a specialist, don't hesitate to grant exclusive authority to a single brokerage source that will represent you exclusively.

Many insurers prefer the latter alternative, because they realize your exclusive authority will permit the brokerage firm to negotiate from a position of strength. More transportation risks are being represented in this fashion. The results are frequently much more favorable.

Don't be needlessly concerned that a single brokerage source will be an impediment to your success. If confidence in the broker is weak, then you shouldn't use him at all.

-- Alternative resources: How a consultant can help.

If you remain apprehensive about the outcome, retain an independent insurance consultant to supervise the marketing process. Consultants sell no insurance. Their function is to supervise your risk-management program.

By and large, I have found that insurance consultants earn every bit of the fee they are paid. They exercise the required supervision over the brokers. They possess a unique capability in knowing the capabilities of the insurers being offered your account.

Overall, risk-management disciplines follow the same basic tenets of good business management. Do your homework, boost your efficiency and minimize your cost.

Thomas A. Laffey is chairman of Polaris Risk Managers Inc., a transportation insurance consulting firm. He may be reached at (973) 882-3100, or via e-mail at polarisins@aol.com. On Insurance is a monthly column.